The SDA Comes to Terms with Its Real Estate Shopping Spree

With 365 properties in its portfolio, the Schools Development Authority has far more potential sites than it has projects. What does it do with the surplus?

An old West New York factory that will be demolished for a new school.

The building at the corner of Broadway and 64th Street is a tattered shell of West New York’s industrial past, scaffolding girdling its perimeter and a smokestack and water tower rising above its rusted "No Trespassing" signs.

It is also a remnant of the School Development Authority’s property splurge in the early part of the decade, when the agency charged with building new schools for New Jersey’s cities bought scores of lots across the state to accommodate those schools.

Now, as the Schools Development Authority (SDA) looks to revamp business and possibly scale back its own work, its properties -- 365 lots in all, totaling more than $150 million in purchase price -- are all getting another look.

NJ Spotlight last month reported that the SDA is viewing 160 properties as potential surplus for school projects that are all but abandoned. But those properties proved less than half of all SDA holdings, some of which also could be sold off in time, officials said.

The West New York property is unlikely to be one of them, since planned demolition of the old factory -- bought for $5.7 million in 2006 -- is expected to make way for a new elementary school, one of 10 projects that the SDA has cleared to proceed.

That is a good thing, too, since the SDA spends more than $300,000 a year managing and maintaining the property, including a fire watch, according to SDA documents.

"We would have likely demolished it anyway, regardless of the planned school, for that very reason," said Marc Larkins, the SDA’s chief executive.

Overall, the SDA spent close to $1.3 million last year maintaining and managing all its properties, the records show. It doesn't know if it will ever use them, given the cutbacks at the authority. And it doesn't know if it can even sell them legally.

That includes dozens of lots purchased in Gloucester City for a middle school yet to win approval, as well as another 140 in Newark for its pending projects.

One prominent legislator who has been critical of the SDA said the agency needs to expedite its plans, suggesting that the languishing properties are also costing property taxpayers in lost revenues.

"Every parcel has its own story, I understand that," said state Sen. Donald Norcross (D-Camden), who chairs the school construction subcommittee of the Joint Committee on Public Schools.

"If we are going to build schools on them, then let’s do that," he said. "But if not, let’s get them back to the municipalities and the tax rolls."

With his inventory complete, Larkins said the next step is to continue reviewing school projects for construction, keeping alive the prospect of schools on at least some of those properties.

If a property is not chosen, Larkins said, it could move to surplus for possible sale through public auction. But he stressed that possibility comes with a host of questions.

He named a few: can the state sell a property for private use if it was taken by eminent domain for a public school? What about the fact purchases were funded through tax-exempt bonds?

"We’d have to answer a lot of legal questions before we start trying to figure out what we would do," Larkins said.

And he points out that it’s not the greatest market to reenter the real estate business, either. "Certainly, the properties are worth some money, but the market is way down from when we bought them, and in reality, we’d be lucky to recoup those amounts," Larkins said.

"This is probably not the best time to be divesting ourselves of any of those," he said.